Bitcoin Pulls Back; Fed Paper Blames BTC Futures for Price Drops

Bitcoin has fallen back to $9,000 again during the weekend thanks to an increase in bearish pressure. The recent price decline, to some extent, could have been triggered by the criticism towards Bitcoin from billionaire Warren Buffett and tech magnate Bill Gates during an interview on CNBC’s Squawk Box. Nevertheless, the drop might only be temporary, as new reports suggest.

Namely, according to Forbes magazine, Bitcoin is expected to continue its rally over the rest of the year, hitting a peak of $15,000 by the end of the final quarter. Analysts at Forbes are making this prediction on the simple premise that every asset’s price growth is dependent on supply and demand. And currently, the demand for Bitcoin is expected to grow, considering a number of recent developments.

Among the most notable causes for price growth, Forbes lists the recent efforts by Goldman Sachs to set up a cryptocurrency trading desk, which we reported on last week, as well as the newly-established requirements for cryptocurrency exchanges to be registered with financial watchdogs. Both cases bring hope that the cryptocurrency sector will become more stabilized and sustainable – a hope that was already reflected in the market where a boost in buying interest was evident during past weeks.

Selling Pressure Mounts

Price charts for the past week show another curved line as Bitcoin grew and declined in a matter of a few days. The lowest price point of $9,040.26 was touched this morning while the highest price point came on Sunday when Bitcoin climbed to $9,940.14. Coinciding with the price changes was a boost and drop in trading volume, which peaked over $10 billion during the price rally. Currently, the volume is back at $7.7 billion while the market capitalization is at $155 billion.

Looking at our market indicators, we see that the bearish pressure is more than evident, with 8 out of 12 oscillators and 9 out of 12 moving averages sending a selling signal on the 5H charts. A similar situation can likewise be observed on short-term charts, which signals that the market is currently in a predominantly selling mood.

The SMA 100 is still over the SMA 200 on long-term charts, showing that less resistance can be found upwards. However, with the price dropping below the SMA 100 dynamic support, and the daily charts showing high/lows and BBP reverting, the price might be headed for a test of the $8,900 range before any rebounds happen, which could work in favor of long traders.

Federal Reserve Blames Bitcoin Futures for 2018 Price Drop

In other interesting news, a new report from the San Francisco Federal Reserve concludes that Bitcoin’s price drop after its peak of $20,000 has been triggered by the launch of a Bitcoin futures market by the Chicago Mercantile Exchange.

As CNBC report, the Federal Bank’s researchers claim that the big price push and subsequent drop of Bitcoin right after the launch of a futures market “does not appear to be a coincidence”. According to the research team, the price drop is “consistent” with the sort of trading behaviour that, historically, has been found to accompany the launch of an asset’s futures market.

As the report shows, Bitcoin saw its peak price on the day the CME launched its Bitcoin futures market – December 17th. Until the futures markets were open, traders could rarely bet on the drop of Bitcoin prices, which allowed optimistic traders to push the cryptocurrency upwards. But with the launch of the futures, more “pessimists” could enter the scene and reverse the trends.